Online video gaming becoming free as digital content doesn’t need the gym business model

The gym business model requires a monthly membership fee because there are only so many treadmills and ellipticals. Online video gaming followed the gym model to huge success but things are slowing down because someone who plays multi-player online (MMO) games can really engage in a couple of games and paying a fixed $15 a month does seem like another expenditure in a slow economy. The solution is the huge news that the $150 Million Star Wars game is now becoming free to the casual player.

And its possible because adding millions of players does'nt involve getting millions of pieces of equipment as in the gym model.  The "gym model" quote is from the CNN story and ascribed to Kate Paiz, executive producer of Turbine's The Lord of the Rings Online. This is such a profound shift in the digital content world that its worth thinking a bit about.

Because digital content involves endless capacity i.e. serve millions of players without adding huge hardware, the content business changes drastically. The free model follows the Zynga model where players don't pay for the regular version but buy credits to play enhanced versions of the game. The masses of gamers get to play and narrower segmentation approaches become possible and those players are happy to pay because they are the ones who really enjoy the enhanced game experiences. It's this absolutely great marketing dream that you (OK  virtually)  meet millions of your "customers" every day  – who are your loyal customers – although they don't necessarily  pay….

Difficult to think of an equivalent "free" experience in the brick's world unless you consider the occasional tiny portion  free tastings at food and wine stores that makes you feel guilty when you don't buy!  In contrast, online gaming is all set to add millions of gamers by offering free games that are the real thing and only if you are really enjoying it you buy extra features and benefits. Kind of like watching a movie at the theater for free and deciding to buy the popcorn if you are really enjoying the movie experience. If every seat were to be filled at the theaters and popcorn revenues could be shared with the movie producers maybe it would work…. but then you start to wonder about shortages of seats, of corn with the drought, and the ability to match seat availability with convenient viewer times and begin to realize that managing a free movie model is very difficult.

Hence digital and the need to completely re-think the business models around digital content. Contact StratoServe.

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